LLM1120 - Introduction to Lloyd's: syndicate capacity
A syndicate바카라 사이트™s 바카라 사이트˜capacity바카라 사이트™ is the term used to refer to the amount of premium income that a syndicate may underwrite for a year of account 바카라 사이트“ that is the maximum amount of premium income, net of reinsurance premiums paid, that it may accept. The syndicate바카라 사이트™s capacity is itself the total of the premium limits of all the syndicate바카라 사이트™s members on that syndicate.
A member바카라 사이트™s overall premium limit (OPL) 바카라 사이트“ often referred to as the member바카라 사이트™s capacity 바카라 사이트“ is directly related to the capital they put at risk: their Funds at Lloyd바카라 사이트™s (LLM1200).
This means that a syndicate바카라 사이트™s capacity is directly related to the amount of the capital backing provided by its members. The syndicate should therefore have sufficient capital backing for it to meet all claims by policyholders against policies written by the syndicate.
Syndicate capacity is referred to in terms of its notional amount.
A syndicate may have 바카라 사이트˜capacity바카라 사이트™ for a year of account of say £100m. A member may have a 10% share of that syndicate, that is, capacity on that syndicate of £10m. The member바카라 사이트™s underwriting on that, and any other, syndicate is taken into account in determining the member바카라 사이트™s capital requirement, that is, how much Funds at Lloyd바카라 사이트™s the member must hold.
It is not unusual for premiums received net of reinsurance to fall short of a syndicate바카라 사이트™s capacity, especially where there is plenty of capacity available in the insurance market generally.
Establishing the true legal character of syndicate capacity is difficult, given the fact that it relates to 바카라 사이트˜annual ventures바카라 사이트™ - see LLM4210.